UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-07582
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The Valiant Fund
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(Exact name of registrant as specified in charter)
221 Pensacola Boulevard, Venice, FL, 34285
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(Address of principal executive offices) (Zip code)
Denis R. Curcio
221 Pensacola Boulevard, Venice, FL, 34285
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(Name and address of agent for service)
Registrant's telephone number, including area code: 800-242-9340
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Date of fiscal year end: 8/31/05
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Date of reporting period: 8/31/05
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ITEM 1. REPORTS TO STOCKHOLDERS.
THE VALIANT FUND
ANNUAL REPORT
AUGUST 31, 2005
THE VALIANT FUND
Annual Report - August 31, 2005
Table of Contents
PAGE
----
- --------------------------------------------------------------------------------
Fees and Expenses Table 1
U.S. TREASURY MONEY MARKET PORTFOLIO
Schedule of Portfolio Investments 3
Statement of Assets and Liabilities 4
Statement of Operations 4
Statements of Changes in Net Assets 5
Financial Highlights 6
- --------------------------------------------------------------------------------
GENERAL MONEY MARKET PORTFOLIO
Schedule of Portfolio Investments 8
Statement of Assets and Liabilities 11
Statement of Operations 11
Statements of Changes in Net Assets 12
Financial Highlights 13
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TAX-EXEMPT MONEY MARKET PORTFOLIO
Schedule of Portfolio Investments 15
Statement of Assets and Liabilities 17
Statement of Operations 17
Statements of Changes in Net Assets 18
Financial Highlights 19
- --------------------------------------------------------------------------------
Notes to Financial Statements 20
Report of Independent Auditors 27
Management of the Trust 28
Approval of Advisory Agreement 30
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FEES AND EXPENSES (UNAUDITED)
As a shareholder of the Valiant Fund, you incur advisory fees and
distribution(12b-1) fees. All other Fund expenses are paid by the advisor. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Fund and to compare these costs with the ongoing costs of
investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held through the six months ended August 31, 2005.
ACTUAL EXPENSES
The first line for each share class in the following tables provides information
about actual account values and actual expenses. You may use the information in
this line, together with the amount you invested, to estimate the expenses that
you paid over the period. Simply divide your account value by $1,000 (for
example, an $8,600 account value divided by $1,000 = 8.6), then multiply the
result by the number in the first line under the heading "Expenses Paid During
the Six-Month Period" to estimate the expenses you paid on your account during
this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line for each share class in the following tables provides
information about hypothetical account values and hypothetical expenses based on
the Porfolios' actual expense ratio and an assumed rate of return of 5% per year
before expenses, which is not the Portfolios' actual return. The hypothetical
account values and expenses may not be used to estimate the actual ending
account balance or expenses you paid for the period. You may use this
information to compare the ongoing costs of investing in the Funds and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the tables are meant to highlight your
ongoing costs only, and do not reflect any transactional costs such as sales
charges (loads). Therefore the second line for each share class in the table is
useful in comparing ongoing costs only, and will not help you determine the
relative total costs of owning different funds. In addition, if these
transactional costs were included, your costs would have been higher.
- ---------------------------------------------------------------------------------------------------------------------
BEGINNING ENDING ANNUALIZED
ACCOUNT ACCOUNT EXPENSE RATIO EXPENSES PAID
VALUE VALUE BASED ON THE DURING THE
03/01/05 08/31/05 SIX-MONTH PERIOD SIX-MONTH PERIOD*
- ---------------------------------------------------------------------------------------------------------------------
U.S. TREASURY MONEY MARKET PORTFOLIO - CLASS A
Actual $1,000.00 $1,014.09 0.20% $1.02
Hypothetical (5% return before expenses) $1,000.00 $1,024.20 0.20% $1.02
- ---------------------------------------------------------------------------------------------------------------------
U.S. TREASURY MONEY MARKET PORTFOLIO - CLASS B
Actual $1,000.00 $1,012.82 0.45% $2.28
Hypothetical (5% return before expenses) $1,000.00 $1,022.94 0.45% $2.29
- ---------------------------------------------------------------------------------------------------------------------
U.S. TREASURY MONEY MARKET PORTFOLIO - CLASS D
Actual $1,000.00 $1,011.55 0.70% $3.55
Hypothetical (5% return before expenses) $1,000.00 $1,021.68 0.70% $3.57
- ---------------------------------------------------------------------------------------------------------------------
1
FEES AND EXPENSES (UNAUDITED)
- ---------------------------------------------------------------------------------------------------------------------
U.S. TREASURY MONEY MARKET PORTFOLIO - CLASS E
Actual $1,000.00 $1,010.02 1.00% $5.07
Hypothetical (5% return before expenses) $1,000.00 $1,020.16 1.00% $5.09
- ---------------------------------------------------------------------------------------------------------------------
GENERAL MONEY MARKET PORTFOLIO - CLASS A
Actual $1,000.00 $1,014.65 0.20% $1.02
Hypothetical (5% return before expenses) $1,000.00 $1,024.20 0.20% $1.02
- ---------------------------------------------------------------------------------------------------------------------
GENERAL MONEY MARKET PORTFOLIO - CLASS B
Actual $1,000.00 $1,013.38 0.45% $2.28
Hypothetical (5% return before expenses) $1,000.00 $1,022.94 0.45% $2.29
- ---------------------------------------------------------------------------------------------------------------------
GENERAL MONEY MARKET PORTFOLIO - CLASS D
Actual $1,000.00 $1,012.10 0.70% $3.55
Hypothetical (5% return before expenses) $1,000.00 $1,021.68 0.70% $3.57
- ---------------------------------------------------------------------------------------------------------------------
GENERAL MONEY MARKET PORTFOLIO - CLASS E
Actual $1,000.00 $1,010.58 1.00% $5.07
Hypothetical (5% return before expenses) $1,000.00 $1,020.16 1.00% $5.09
- ---------------------------------------------------------------------------------------------------------------------
TAX-EXEMPT MONEY MARKET PORTFOLIO - CLASS A
Actual $1,000.00 $1,010.87 0.20% $1.01
Hypothetical (5% return before expenses) $1,000.00 $1,024.20 0.20% $1.02
- ---------------------------------------------------------------------------------------------------------------------
TAX-EXEMPT MONEY MARKET PORTFOLIO - CLASS B
Actual $1,000.00 $1,009.60 0.45% $2.28
Hypothetical (5% return before expenses) $1,000.00 $1,022.94 0.45% $2.29
- ---------------------------------------------------------------------------------------------------------------------
* EXPENSES FOR EACH PORTFOLIO ARE CALCULATED USING THE PORTFOLIO'S ANNUALIZED
EXPENSE RATIO FOR EACH FUND, WHICH REPRESENTS THE ONGOING EXPENSES AS A
PERCENTAGE OF NET ASSETS FOR THE SIX-MONTHS ENDED 08/31/05. EXPENSES ARE
CALCULATED BY MULTIPLYING THE ANNUALIZED EXPENSE RATIO BY THE AVERAGE ACCOUNT
VALUE FOR THE PERIOD; THEN MULTIPLYING THE RESULT BY THE NUMBER OF DAYS IN THE
MOST RECENT FISCAL HALF-YEAR; AND THEN DIVIDING THAT RESULT BY THE NUMBER OF
DAYS IN THE CALENDAR YEAR. EXPENSE RATIOS FOR THE MOST RECENT FISCAL HALF-YEAR
MAY DIFFER FROM EXPENSE RATIOS BASED ON THE ONE-YEAR DATA IN THE FINANCIAL
HIGHLIGHTS.
2
THE VALIANT FUND
U.S. TREASURY MONEY MARKET PORTFOLIO
Schedule of Portfolio Investments
August 31, 2005
MATURITY PRINCIPAL
RATE DATE AMOUNT VALUE
------ ---------- ------------ ------------
U.S. TREASURY OBLIGATIONS - 55.2%
U.S. TREASURY BILLS(A) - 44.7% 3.25% 9/1/2005 $ 80,000,000 $ 80,000,000
3.11 10/13/2005 15,000,000 14,946,450
3.14 11/3/2005 10,000,000 9,945,925
------------
104,892,375
------------
U.S. TREASURY NOTES - 10.5% 1.625 2/28/2006 25,000,000 24,756,903
------------
TOTAL U.S. TREASURY OBLIGATIONS (AMORTIZED COST $129,649,278) 129,649,278
------------
REPURCHASE AGREEMENTS - 45.0%
Bank of America, Inc., 3.55%, due 9/1/05,
with a maturity value of $15,001,479
(Collateralized by various 3.50% - 6.00% GNMA bonds valued at $15,300,000
with maturity dates 9/20/31 - 11/15/34) 15,000,000 15,000,000
Citigroup, Inc., 3.54%, due 9/1/05,
with a maturity value of $30,002,950
(Collateralized by various 4.50% - 6.50% GNMA bonds valued at $30,600,000
with maturity dates 7/20/26 - 6/16/34) 30,000,000 30,000,000
J.P. Morgan Chase & Co., 3.57%, due 9/1/05,
with a maturity value of $30,703,044
(Collateralized by various 5.61% - 6.50% GNMA bonds valued at $31,316,878
with maturity dates 4/20/31 - 12/15/46) 30,700,000 30,700,000
UBS Paine Webber, 3.56%, due 9/1/05,
with a maturity value of $30,002,967
(Collateralized by various 4.50% - 12.00% GNMA bonds valued at $30,605,432
with maturity dates 8/15/07 - 4/15/43) 30,000,000 30,000,000
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TOTAL REPURCHASE AGREEMENTS (AMORTIZED COST $105,700,000) 105,700,000
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TOTAL INVESTMENTS (AMORTIZED COST $235,349,278) (B) - 100.2% 235,349,278
Liabilities in Excess of Other Assets - (0.2%) (384,567)
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TOTAL NET ASSETS - 100% $234,964,711
============
- ----------
(a) Interest rate represents yield to maturity at purchase.
(b) Cost and value for federal income tax and financial reporting purposes
are the same.
GNMA - Government National Mortgage Association
VALIANT U.S. TREASURY MONEY MARKET PORTFOLIO
U.S. Treasury Obligation 55.2%
Repurchase Agreements 45.0
------
100.2
Liabilities In Excess of Other Assets (0.2)
------
100.0%
======
See notes to financial statements.
3
THE VALIANT FUND
U.S. TREASURY MONEY MARKET PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 2005
ASSETS:
Investments at value (amortized cost $129,649,278) $ 129,649,278
Repurchase agreements (amortized cost $105,700,000) 105,700,000
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Total investments 235,349,278
Cash 300,971
Receivables:
Interest 11,563
Other assets 7,428
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TOTAL ASSETS 235,669,240
LIABILITIES:
Payables:
Dividends $ 567,984
Accrued expenses and other liabilities:
Investment manager 41,171
Distribution and shareholder servicing 95,374
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TOTAL LIABILITIES 704,529
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NET ASSETS $ 234,964,711
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COMPOSITION OF NET ASSETS:
Capital $ 235,216,368
Accumulated net realized loss from investment transactions (251,657)
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NET ASSETS $ 234,964,711
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Class A Shares
Net assets $ 1,185,931
Shares outstanding (unlimited number of shares authorized with no par value) 1,187,170
Net Asset Value, Offering Price and Redemption Price per share $ 1.00
=============
Class B Shares
Net assets $ 85,223,333
Shares outstanding (unlimited number of shares authorized with no par value) 85,324,291
Net Asset Value, Offering Price and Redemption Price per share $ 1.00
=============
Class D Shares
Net assets $ 132,938,185
Shares outstanding (unlimited number of shares authorized with no par value) 133,072,645
Net Asset Value, Offering Price and Redemption Price per share $ 1.00
=============
Class E Shares
Net assets $ 15,617,262
Shares outstanding (unlimited number of shares authorized with no par value) 15,632,267
Net Asset Value, Offering Price and Redemption Price per share $ 1.00
=============
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 2005
INVESTMENT INCOME:
Interest $ 6,510,952
Securities lending income - net 19,577
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TOTAL INVESTMENT INCOME 6,530,529
EXPENSES:
Investment manager $ 535,455
Distribution and shareholder servicing:
Class A Shares 2,573
Class B Shares 281,187
Class D Shares 849,161
Class E Shares 134,565
Trustees fees 13,070
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Total expenses before contractual fee reimbursements 1,816,011
Contractual fee reimbursements (95,982)
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NET EXPENSES 1,720,029
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NET INVESTMENT INCOME 4,810,500
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NET REALIZED GAIN FROM INVESTMENT
TRANSACTIONS 21
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NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 4,810,521
=============
See notes to financial statements.
4
THE VALIANT FUND
U.S. TREASURY MONEY MARKET PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE FOR THE
YEAR ENDED YEAR ENDED
AUGUST 31, 2005 AUGUST 31, 2004
--------------- ---------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 4,810,500 $ 1,971,634
Net realized gain from investment transactions 21 406
--------------- ---------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 4,810,521 1,972,040
--------------- ---------------
DIVIDENDS:
Net investment income:
Class A Shares (18,995) (32,008)
Class B Shares (1,663,384) (843,776)
Class D Shares (2,912,706) (1,073,808)
Class E Shares (263,030) (22,042)
--------------- ---------------
TOTAL DIVIDENDS TO SHAREHOLDERS (4,858,115) (1,971,634)
--------------- ---------------
DECREASE IN NET ASSETS FROM CAPITAL TRANSACTIONS (NOTE 4) (67,502,822) (145,889,098)
--------------- ---------------
NET DECREASE IN NET ASSETS (67,550,416) (145,888,692)
NET ASSETS:
Beginning of period 302,515,127 448,403,819
--------------- ---------------
End of period (including accumulated undistributed net
investment income of $0 and $47,615, respectively.) $ 234,964,711 $ 302,515,127
=============== ===============
See notes to financial statements.
5
THE VALIANT FUND
U.S. TREASURY MONEY MARKET PORTFOLIO
FINANCIAL HIGHLIGHTS, CLASS A SHARES
For the years ended August 31,
----------------------------------------------------------------------
2005 2004 2003 2002 2001
---------- ---------- ---------- ---------- ----------
Net Asset Value, Beginning of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
---------- ---------- ---------- ---------- ----------
Investment Activities
Net investment income 0.023 0.009 0.012 0.021 0.050
---------- ---------- ---------- ---------- ----------
Dividends
Net investment income (0.023) (0.009) (0.012) (0.021) (0.050)
---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
========== ========== ========== ========== ==========
Total Return (a) 2.31% 0.92% 1.22% 2.05% 5.30%
Ratios/Supplementary Data:
Net Assets at end of period (000) $ 1,186 $ 339 $ 7,159 $ 7,260 $ 10,355
Ratio of expenses to average net assets, before contractual
fee waivers and / or expense reimbursements 0.55% 0.55% 0.55% 0.55% 0.55%
Ratio of expenses to average net assets 0.20% 0.20% 0.20% 0.20% 0.20%
Ratio of net investment income to average net assets 2.58% 0.87% 1.21% 2.12% 5.13%
FINANCIAL HIGHLIGHTS, CLASS B SHARES
For the years ended August 31,
----------------------------------------------------------------------
2005 2004 2003 2002 2001
---------- ---------- ---------- ---------- ----------
Net Asset Value, Beginning of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
---------- ---------- ---------- ---------- ----------
Investment Activities
Net investment income 0.020 0.007 0.010 0.018 $ 0.050
---------- ---------- ---------- ---------- ----------
Dividends
Net investment income (0.020) (0.007) (0.010) (0.018) $ (0.050)
---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
========== ========== ========== ========== ==========
Total Return (a) 2.06% 0.67% 0.96% 1.80% 5.04%
Ratios/Supplementary Data:
Net Assets at end of period (000) $ 85,223 $ 89,633 $ 126,617 $ 146,246 $ 117,213
Ratio of expenses to average net assets, before contractual
fee waivers and / or expense reimbursements 0.55% 0.55% 0.55% 0.55% 0.55%
Ratio of expenses to average net assets 0.45% 0.45% 0.45% 0.45% 0.45%
Ratio of net investment income to average net assets 2.05% 0.65% 0.95% 1.77% 4.44%
(a) Total return is calculated assuming a purchase of shares on the first day
and a sale on the last day of each period reported and includes
reinvestment of dividends.
See notes to financial statements.
6
THE VALIANT FUND
U.S. TREASURY MONEY MARKET PORTFOLIO
FINANCIAL HIGHLIGHTS, CLASS D SHARES
For the years ended August 31,
----------------------------------------------------------------------
2005 2004 2003 2002 2001
---------- ---------- ---------- ---------- ----------
Net Asset Value, Beginning of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
---------- ---------- ---------- ---------- ----------
Investment Activities
Net investment income 0.018 0.004 0.008 0.015 $ 0.050
---------- ---------- ---------- ---------- ----------
Dividends
Net investment income (0.018) (0.004) (0.008) (0.015) $ (0.050)
---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
========== ========== ========== ========== ==========
Total Return (a) 1.80% 0.42% 0.71% 1.54% 4.77%
Ratios/Supplementary Data:
Net Assets at end of period (000) $ 132,938 $ 197,640 $ 286,191 $ 325,896 $ 339,659
Ratio of expenses to average net assets, before contractual
fee waivers and / or expense reimbursements 0.70% 0.70% 0.70% 0.70% 0.70%
Ratio of expenses to average net assets 0.70% 0.70% 0.70% 0.70% 0.70%
Ratio of net investment income to average net assets 1.70% 0.41% 0.71% 1.54% 4.55%
FINANCIAL HIGHLIGHTS, CLASS E SHARES
For the years ended August 31,
----------------------------------------------------------------------
2005 2004 2003 2002 2001
---------- ---------- ---------- ---------- ----------
Net Asset Value, Beginning of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
---------- ---------- ---------- ---------- ----------
Investment Activities
Net investment income 0.015 0.001 0.005 0.013 $ 0.040
---------- ---------- ---------- ---------- ----------
Dividends
Net investment income (0.015) (0.001) (0.005) (0.013) $ (0.040)
---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
========== ========== ========== ========== ==========
Total Return (a) 1.50% 0.12% 0.41% 1.24% 4.46%
Ratios/Supplementary Data:
Net Assets at end of period (000) $ 15,617 $ 14,903 $ 28,437 $ 105,257 $ 220,850
Ratio of expenses to average net assets, before contractual
fee waivers and / or expense reimbursements 1.00% 1.00% 1.00% 1.00% 1.00%
Ratio of expenses to average net assets 1.00% 1.00% 1.00% 1.00% 1.00%
Ratio of net investment income to average net assets 1.55% 0.10% 0.48% 1.32% 4.19%
(a) Total return is calculated assuming a purchase of shares on the first day
and a sale on the last day of each period reported and includes
reinvestment of dividends.
See notes to financial statements.
7
THE VALIANT FUND
GENERAL MONEY MARKET PORTFOLIO
Schedule of Portfolio Investments
August 31, 2005
MATURITY PRINCIPAL
RATE DATE AMOUNT VALUE
------ ---------- ------------ ------------
COMMERCIAL PAPER - 40.6%
BANKING - 9.6%
Alliance & Leicester PLC 3.71% 11/16/2005 15,000,000 14,882,516
Depfa Bank Europe PLC 3.65 10/24/2005 20,000,000 19,892,528
------------
34,775,044
------------
DISTRIBUTION/WHOLESALE - 4.5%
Louis Dreyfus Corp. 3.58 9/27/05 16,500,000 16,457,339
------------
EDUCATION - 3.1%
Johns Hopkins University 3.62 10/13/05 11,300,000 11,300,000
------------
FINANCE - 4.1%
Bear Stearns Cos., Inc. 3.54 9/27/05 15,000,000 14,961,650
------------
REGIONAL AGENCIES - 0.1%
Tennessee State School Bond Authority Commercial Paper Notes 3.40 9/7/05 320,000 320,000
------------
SPECIAL PURPOSE ENTITY - 19.2%
Greyhawk Funding 3.55 9/26/2005 20,000,000 19,950,694
Lockhart Funding LLC 3.59 9/28/2005 20,000,000 19,946,150
Market Street Funding 3.51 9/14/2005 15,000,000 14,980,987
NATC California LLC 3.53 10/17/2005 15,000,000 14,932,342
------------
69,810,173
------------
TOTAL COMMERCIAL PAPER (AMORTIZED COST $147,624,206) 147,624,206
------------
CORPORATE OBLIGATIONS* - 18.8%
FINANCIAL SERVICES - 3.9%
Bank of America 3.56 9/1/2005 10,000,000 10,000,000
Labelle Capital Funding LLC 3.69 9/1/2005 1,125,000 1,125,000
Wyoming Steel Investment 3.74 9/1/2005 3,030,000 3,030,000
------------
14,155,000
------------
FOOD - 0.3%
Jacksons Food Stores, Inc. 3.69 9/1/2005 913,000 913,000
------------
HEALTH SERVICES - 1.5%
Gastroenterology Associates, LLC 3.60 9/1/2005 2,720,000 2,720,000
Louisiana Endoscopy Floater 3.60 9/1/2005 1,930,000 1,930,000
Riverview Medical Office Building 3.66 9/1/2005 800,000 800,000
------------
5,450,000
------------
LEISURE - 1.2%
Commonwealth Country Club, Ltd. 3.66 9/1/2005 3,240,000 3,240,000
Sandusky Yacht Club 3.69 9/1/2005 1,185,000 1,185,000
------------
4,425,000
------------
REAL ESTATE - 5.1%
208 Associates LLC 3.69 9/1/2005 895,000 895,000
Aztec Properties LLC 3.64 9/1/2005 1,993,000 1,993,000
CMW Real Estate LLC 3.66 9/1/2005 2,225,000 2,225,000
El Dorado Enterprises of Miami FL 3.66 9/1/2005 1,900,000 1,900,000
El Dorado Enterprises of Miami FL 3.61 9/1/2005 9,315,000 9,315,000
G & J Properties II 3.64 9/1/2005 930,000 930,000
Ordeal Properties LLC 3.69 9/1/2005 1,400,000 1,400,000
------------
18,658,000
------------
See notes to financial statements.
8
THE VALIANT FUND
GENERAL MONEY MARKET PORTFOLIO
Schedule of Portfolio Investments
August 31, 2005
MATURITY PRINCIPAL
RATE DATE AMOUNT VALUE
------ ---------- ------------ ------------
SPECIAL PURPOSE ENTITY - 6.8%
Approach Partnership 3.69% 9/1/2005 $ 1,035,000 $ 1,035,000
Barry-Wehmiller Group 3.64 9/1/2005 1,085,000 1,085,000
Best One Tire & Service 3.64 9/1/2005 900,000 900,000
Butler County, Surgical Properties 3.64 9/1/2005 1,355,000 1,355,000
Chuo Mubea Suspen Compon 3.64 9/1/2005 400,000 400,000
Exal Corp. 3.64 9/1/2005 1,400,000 1,400,000
FE LLC 3.59 9/1/2005 950,000 950,000
GCG Portage LLC 3.74 9/1/2005 1,235,000 1,235,000
GMC Financing, LLC 3.68 9/1/2005 3,025,000 3,025,000
ISO Building LLC 3.64 9/1/2005 900,000 900,000
K. C. Jordan & Associates 3.64 9/1/2005 700,000 700,000
Michigan Equity Group 3.64 9/1/2005 1,300,000 1,300,000
MMR Development Co. 3.64 9/1/2005 1,070,000 1,070,000
Physicians Center LP 3.68 9/1/2005 3,125,000 3,125,000
Taylor Steel, Inc. 3.15 9/1/2005 2,150,000 2,150,000
United Transportation Union 3.64 9/1/2005 925,000 925,000
Village Enterprises 3.69 9/1/2005 985,000 985,000
Wellington Green LLC 3.69 9/1/2005 2,280,000 2,280,000
------------
24,820,000
------------
TOTAL CORPORATE OBLIGATIONS (AMORTIZED COST $68,421,000) 68,421,000
------------
CERTIFICATE OF DEPOSIT - 12.4%
Banking - 12.4%
Citibank 3.40 9/6/2005 25,000,000 25,000,000
Union Bank of Switzerland 3.61 10/3/2005 20,000,000 20,000,089
------------
TOTAL CERTIFICATE OF DEPOSIT (AMORTIZED COST $45,000,089) 45,000,089
------------
MUNICIPAL NOTES AND BONDS* - 8.5%
ALABAMA - 4.9%
Auburn Taxable Revenue, Series B 3.60 9/1/2005 5,840,000 5,840,000
Meadow Brook 3.68 9/1/2005 12,040,000 12,040,000
------------
17,880,000
------------
ILLINOIS - 1.3%
Upper Illinois River Valley Development Authority 3.69 9/1/2005 4,595,000 4,595,000
------------
MICHIGAN - 0.4%
Michigan City Industrial Economic Development Revenue 3.64 9/1/2005 1,605,000 1,605,000
------------
NEW YORK - 1.0%
Baird Properties LLC 3.78 9/1/2005 2,110,000 2,110,000
IHA Capital Development Corp. 3.64 9/1/2005 1,500,000 1,500,000
------------
3,610,000
------------
OHIO - 0.8%
Hopkins Waterhouse LLC 3.66 9/1/2005 870,000 870,000
Mercer County, HealthCare Facilities 3.66 9/1/2005 1,895,000 1,895,000
------------
2,765,000
------------
VIRGINIA - 0.1%
Ashland Industrial Development Authority 3.93 9/1/2005 350,000 350,000
------------
TOTAL MUNICIPAL NOTES AND BONDS (AMORTIZED COST $30,805,000) 30,805,000
------------
See notes to financial statements.
9
THE VALIANT FUND
GENERAL MONEY MARKET PORTFOLIO
Schedule of Portfolio Investments
August 31, 2005
MATURITY PRINCIPAL
RATE DATE AMOUNT VALUE
------ ---------- ------------ ------------
REPURCHASE AGREEMENT - 19.8%
Bank of America, Inc., 3.55%, due 9/01/05,
with a maturity value of $72,100,000
(Collateralized by various 5.00% - 6.57% GNMA bonds valued at $73,440,001
with maturity dates 9/16/26 - 8/15/35) $72,000,000 $ 72,000,000
------------
TOTAL REPURCHASE AGREEMENTS (AMORTIZED COST $72,000,000) 72,000,000
------------
Total Investments (Amortized Cost $363,850,295) (a) - 100.1% 363,850,295
Liabilities in Excess of Other Assets - (0.1%) (459,160)
------------
TOTAL NET ASSETS - 100% $363,391,135
============
- ----------
* Variable rate investment. Securities payable on demand at par including
accrued interest (usually within seven days notice) and unconditionally
secured as to principal and interest by letters of credit or other credit
support agreements from major banks. The interest rates are adjustable and
are based on bank prime rates or other interest rate adjustment indices.
The rate shown represents the rate in effect at August 31, 2005. The
maturity date shown reflects next rate change date.
(a) The cost of investments for federal income tax purposes at August 31, 2005
is $363,850,317.
GNMA - Government National Mortgage Association
LLC - Limited Liability Corporation
LP - Limited Partnership
PLC - Public Limited Company
SA - Sociedad Anonyma (French, Spanish)
VALIANT GENERAL MONEY MARKET PORTFOLIO
Commercial Paper 40.6%
Corporate Obligations 18.8
Certificate of Deposit 12.4
Municipal Notes and Bonds 8.5
Repurchase Agreement 19.8
------
100.1
Liabilities In Excess of Other Assets (0.1)
------
100.0%
======
See notes to financial statements.
10
THE VALIANT FUND
GENERAL MONEY MARKET PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 2005
ASSETS:
Investments, at value (amortized cost $291,850,295) $ 291,850,295
Repurchase agreements (amortized cost $72,000,000) 72,000,000
-------------
Total investments 363,850,295
Cash 89,115
Receivables:
Interest 551,048
Other assets 9
-------------
TOTAL ASSETS 364,490,467
LIABILITIES:
Payables:
Dividends $ 990,582
Accrued expenses and other liabilities:
Investment manager 62,583
Distribution and shareholder servicing 46,167
-------------
TOTAL LIABILITIES 1,099,332
-------------
NET ASSETS $ 363,391,135
=============
COMPOSITION OF NET ASSETS:
Capital $ 363,444,310
Accumulated net realized loss from investment transactions (53,175)
-------------
NET ASSETS $ 363,391,135
=============
Class A Shares
Net assets $ 273,911,297
Shares outstanding (unlimited number of shares authorized with no par value) 273,967,238
Net Asset Value, Offering Price and Redemption Price per share $ 1.00
=============
Class B Shares
Net assets $ 103,151
Shares outstanding (unlimited number of shares authorized with no par value) 103,179
Net Asset Value, Offering Price and Redemption Price per share $ 1.00
=============
Class D Shares
Net assets $ 53,721,632
Shares outstanding (unlimited number of shares authorized with no par value) 53,734,243
Net Asset Value, Offering Price and Redemption Price per share $ 1.00
=============
Class E Shares
Net assets $ 35,655,055
Shares outstanding (unlimited number of shares authorized with no par value) 35,668,919
Net Asset Value, Offering Price and Redemption Price per share $ 1.00
=============
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 2005
INVESTMENT INCOME:
Interest $ 11,359,384
-------------
TOTAL INVESTMENT INCOME 11,359,384
EXPENSES:
Investment manager $ 876,689
Distribution and shareholder servicing:
Class A Shares 1,197,317
Class B Shares 6,620
Class D Shares 279,397
Class E Shares 307,857
Trustees fees 19,073
-------------
Total expenses before contractual fee reimbursements 2,686,953
Contractual fee waivers and expense reimbursements (1,218,282)
-------------
NET EXPENSES 1,468,671
-------------
NET INVESTMENT INCOME 9,890,713
-------------
NET REALIZED LOSS FROM INVESTMENT TRANSACTIONS (22)
-------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 9,890,691
=============
See notes to financial statements.
11
THE VALIANT FUND
GENERAL MONEY MARKET PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE FOR THE
YEAR ENDED YEAR ENDED
AUGUST 31, 2005 AUGUST 31, 2004
--------------- ---------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 9,890,713 $ 4,041,705
Net realized loss from investment transactions (22) (1,354)
--------------- ---------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 9,890,691 4,040,351
--------------- ---------------
DIVIDENDS:
Net investment income:
Class A Shares (8,222,301) (3,564,854)
Class B Shares (28,849) (45,082)
Class D Shares (1,047,613) (333,462)
Class E Shares (591,950) (98,307)
--------------- ---------------
TOTAL DIVIDENDS TO SHAREHOLDERS (9,890,713) (4,041,705)
--------------- ---------------
DECREASE IN NET ASSETS FROM CAPITAL TRANSACTIONS (NOTE 4) (4,761,334) (139,806,527)
--------------- ---------------
NET DECREASE IN NET ASSETS (4,761,356) (139,807,881)
NET ASSETS:
Beginning of year 368,152,491 507,960,372
--------------- ---------------
End of year (including accumulated undistributed net
investment income of $0 and $0, respectively) $ 363,391,135 $ 368,152,491
=============== ===============
See notes to financial statements.
12
THE VALIANT FUND
GENERAL MONEY MARKET PORTFOLIO
FINANCIAL HIGHLIGHTS, CLASS A SHARES
For the years ended August 31,
----------------------------------------------------------------------
2005 2004 2003 2002 2001
---------- ---------- ---------- ---------- ----------
Net Asset Value, Beginning of Year $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
---------- ---------- ---------- ---------- ----------
INVESTMENT ACTIVITIES
Net investment income 0.024 0.010 0.013 0.022 $ 0.050
---------- ---------- ---------- ---------- ----------
DIVIDENDS
Net investment income (0.024) (0.010) (0.013) (0.022) $ (0.050)
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF YEAR $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
========== ========== ========== ========== ==========
TOTAL RETURN (A) 2.42% 1.01% 1.29% 2.24% 5.52%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 273,911 $ 256,923 $ 364,392 $ 357,676 $ 380,513
Ratio of expenses to average net assets, before contractual
fee waivers and / or expense reimbursements 0.55% 0.55% 0.55% 0.55% 0.55%
Ratio of expenses to average net assets 0.20% 0.20% 0.20% 0.20% 0.20%
Ratio of net investment income to average net assets 2.40% 0.99% 1.28% 2.22% 5.36%
FINANCIAL HIGHLIGHTS, CLASS B SHARES
For the years ended August 31,
----------------------------------------------------------------------
2005 2004 2003 2002 2001
---------- ---------- ---------- ---------- ----------
Net Asset Value, Beginning of Year $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
---------- ---------- ---------- ---------- ----------
INVESTMENT ACTIVITIES
Net investment income 0.021 0.008 0.010 0.019 $ 0.050
---------- ---------- ---------- ---------- ----------
DIVIDENDS
Net investment income (0.021) (0.008) (0.010) (0.019) $ (0.050)
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF YEAR $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
========== ========== ========== ========== ==========
TOTAL RETURN (A) 2.16% 0.76% 1.04% 1.98% 5.25%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 103 $ 5,064 $ 10,620 $ 15,719 $ 9,169
Ratio of expenses to average net assets, before contractual
fee waivers and / or expense reimbursements 0.55% 0.50% 0.55% 0.55% 0.55%
Ratio of expenses to average net assets 0.45% 0.45% 0.45% 0.45% 0.45%
Ratio of net investment income to average net assets 1.53% 0.74% 1.03% 1.91% 4.91%
(a) Total return is calculated assuming a purchase of shares on the first day
and a sale on the last day of each period reported and includes
reinvestment of dividends.
See notes to financial statements.
13
THE VALIANT FUND
GENERAL MONEY MARKET PORTFOLIO
FINANCIAL HIGHLIGHTS, CLASS D SHARES
For the year ended August 31,
----------------------------------------------------------------------
2005 2004 2003 2002 2001
---------- ---------- ---------- ---------- ----------
Net Asset Value, Beginning of Year $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
---------- ---------- ---------- ---------- ----------
INVESTMENT ACTIVITIES
Net investment income 0.019 0.005 0.007 0.016 $ 0.050
---------- ---------- ---------- ---------- ----------
DIVIDENDS
Net investment income (0.019) (0.005) (0.007) (0.016) $ (0.050)
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF YEAR $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
========== ========== ========== ========== ==========
TOTAL RETURN (A) 1.91% 0.50% 0.79% 1.73% 4.99%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 53,722 $ 59,116 $ 74,943 $ 40,662 $ 16,861
Ratio of expenses to average net assets, before contractual
fee waivers and / or expense reimbursements 0.70% 0.70% 0.70% 0.70% 0.70%
Ratio of expenses to average net assets 0.70% 0.70% 0.70% 0.70% 0.70%
Ratio of net investment income to average net assets 1.87% 0.50% 0.73% 1.55% 4.81%
FINANCIAL HIGHLIGHTS, CLASS E SHARES
For the years ended August 31,
----------------------------------------------------------------------
2005 2004 2003 2002 2001
---------- ---------- ---------- ---------- ----------
Net Asset Value, Beginning of Year $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
---------- ---------- ---------- ---------- ----------
INVESTMENT ACTIVITIES
Net investment income 0.016 0.002 0.005 0.014 $ 0.050
DIVIDENDS
Net investment income (0.016) (0.002) (0.005) (0.014) $ (0.050)
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF YEAR $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
========== ========== ========== ========== ==========
TOTAL RETURN (A) 1.61% 0.20% 0.49% 1.42% 4.68%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 35,655 $ 47,050 $ 58,005 $ 83,742 $ 99,984
Ratio of expenses to average net assets, before contractual
fee waivers and / or expense reimbursements 1.00% 1.00% 1.00% 1.00% 1.00%
Ratio of expenses to average net assets 1.00% 1.00% 1.00% 1.00% 1.00%
Ratio of net investment income to average net assets 1.54% 0.20% 0.51% 1.45% 4.23%
(a) Total return is calculated assuming a purchase of shares on the first day
and a sale on the last day of each period reported and includes
reinvestment of dividends.
See notes to financial statements.
14
THE VALIANT FUND
TAX-EXEMPT MONEY MARKET PORTFOLIO
Schedule of Portfolio Investments
August 31, 2005
MATURITY PRINCIPAL
RATE DATE AMOUNT VALUE
------ ---------- ------------ ------------
COMMERCIAL PAPER - 9.3%
FLORIDA - 8.2%
City of Gainesville 2.45% 10/12/05 $ 5,000,000 $ 5,000,000
Sarasota County Public Hospital, LOC Suntrust Bank 2.56 10/3/05 4,050,000 4,050,000
Sunshine State, Series H 2.55 11/3/05 3,000,000 3,000,000
------------
12,050,000
------------
PENNSYLVANIA - 1.1%
Delaware County 2.55 10/4/05 1,700,000 1,700,000
------------
TOTAL COMMERCIAL PAPER (AMORTIZED COST $13,750,000) 13,750,000
------------
MUNICIPAL BONDS AND NOTES - 9.1%
FLORIDA - 1.4%
Palm Beach County School District, TAN 3.00 9/28/05 2,000,000 2,001,890
------------
KANSAS - 2.0%
Wyandotte County-Kansas City Unified Government, Series VIII 2.80 11/1/05 3,000,000 3,003,909
------------
TEXAS - 1.0%
Richardson Independent School District 2.75 4/1/06 1,500,000 1,500,000
------------
UTAH - 4.7%
Davis County Utah 3.75 12/29/05 3,000,000 3,011,651
Weber County TAN 3.50 12/30/05 3,900,000 3,908,082
------------
6,919,733
------------
TOTAL MUNICIPAL BONDS AND NOTES (AMORTIZED COST $13,425,532) 13,425,532
------------
VARIABLE MUNICIPAL BONDS* - 81.4%
ALASKA - 0.7%
Valdez Alaska Marine Terminal Revenue, BP Pipelines Income Project 2.33 9/1/05 1,000,000 1,000,000
------------
CONNECTICUT - 3.7%
Connecticut State Health and Educational Facilities Authority Revenue,
Yale University, Series X-3 2.30 9/1/05 2,500,000 2,500,000
Connecticut State Health and Educational Facilities Authority Revenue,
Yale University, Series T-1 2.30 9/1/05 3,000,000 3,000,000
------------
5,500,000
------------
FLORIDA - 48.8%
ABN AMRO Munitops Certificates of Trust 2.40 9/7/05 3,650,000 3,650,000
Alachua County Florida Health Facilities Authority Continuing Care, LOC
BNP Paribas 2.32 9/1/05 200,000 200,000
Collier County Educational Facilities Authority Revenue, LOC Fifth Third Bank 2.49 9/2/05 1,000,000 1,000,000
Collier County, IDR, Health Care Facilities Revenue, LOC Fifth Third Bank 2.49 9/2/05 1,900,000 1,900,000
Dade County Water and Sewer Systems Revenue 2.34 9/7/05 6,000,000 6,000,000
Florida Gulf Coast University Financing Corp., Capital Improvement Revenue,
LOC Wachovia Bank N. A 2.50 9/1/05 2,000,000 2,000,000
Florida HFA, Multi-Family, LOC Credit Suisse First Boston 2.41 9/7/05 2,400,000 2,400,000
Florida Housing Finance Corp., Multifamily Revenue, Charleston, Series I-A 2.50 9/1/05 2,375,000 2,375,000
Florida Housing Finance Corp., Multi Family Revenue, Cypress Lake 2.50 9/1/05 3,500,000 3,500,000
Florida State Municipal Power Agency Revenue, Stanton Project 2.32 9/7/05 1,000,000 1,000,000
Halifax Hospital Medical Center, Health Care Facilities Revenue 2.36 9/7/05 1,200,000 1,200,000
Jacksonville Economic Development Commission Health Care Facilities Revenue,
Series A LOC Fortis Banque Belgium, JP Morgan Chase Bank 2.47 9/1/05 2,000,000 2,000,000
Jacksonville Health Facilities Authority Hospital Revenue 2.33 9/7/05 2,295,000 2,295,000
Jacksonville Health Facilities Authority Hospital 2.68 9/7/05 5,000,000 5,000,000
Lakeland Energy Systems Revenue, Series A 2.38 9/7/05 3,000,000 3,000,000
Lee County Florida Industrial Development Authority Healthcare Facility 2.51 9/2/05 2,885,000 2,885,000
Orange County Industrial Development Authority, IDR, LOC U.S. Bank Trust N.A 2.60 10/1/05 1,500,000 1,500,000
Orlando Utilities Commission Water & Electric Revenue, Series B 2.36 9/7/05 4,000,000 4,000,000
Palm Beach County Revenue, Norton Gallery, Inc. Project 2.39 9/7/05 4,000,000 4,000,000
Palm Beach County Revenue, Raymond F. Kravis Center Project, LOC
Northern Trust Co. 2.48 9/1/05 2,500,000 2,500,000
Polk County School Board COP, Series A 2.49 9/1/05 2,000,000 2,000,000
Port Orange Revenue, Palmer College Project, LOC Lasalle Bank N.A 2.50 9/1/05 8,500,000 8,500,000
St. Johns County, HFA Multi-Family Remington 2.38 9/7/05 7,600,000 7,600,000
Tampa Health Care Facilities Revenue Lifelink Foundation, Inc. Project 2.49 9/7/05 1,500,000 1,500,000
------------
72,005,000
------------
INDIANA - 1.1%
Hammond Indianapolis Pollution Control Revenue, Amoco Oil Co. Project 2.33 9/1/05 1,580,000 1,580,000
------------
See notes to financial statements.
15
THE VALIANT FUND
TAX-EXEMPT MONEY MARKET PORTFOLIO
Schedule of Portfolio Investments
August 31, 2005
MATURITY PRINCIPAL
RATE DATE AMOUNT VALUE
------ ---------- ------------ ------------
LOUISIANA - 1.4%
Plaquemines Port Harbor and Terminal District Port Facility Revenue,
International Marine Terminal
Project A, LOC Kredietbank N.V 2.60% 3/15/06 $ 2,000,000 $ 2,000,000
------------
MASSACHUSETTES - 4.7%
Massachusettes State Health & Educational Facility Authority - Harvard
University, Series BB 2.30 9/1/05 7,000,000 7,000,000
NEW YORK - 5.1%
New York State Housing Finance Agency Revenue, Normandie Center Project I 2.33 9/7/05 2,000,000 2,000,000
New York Floater Variable - Sub Series A-6 2.33 9/7/05 5,545,000 5,545,000
------------
7,545,000
------------
NORTH CAROLINA - 3.5%
North Carolina Educational Facilities Finance Agency Revenue, Duke
University Project, Series A 2.52 9/1/05 3,140,000 3,140,000
North Carolina Medical Care Common Hospital Revenue, Duke University
Project, Series A 2.55 9/1/05 2,000,000 2,000,000
------------
5,140,000
------------
PUERTO RICO - 3.0%
Puerto Rico Electric Power Authority Revenue 2.31 9/7/05 3,000,000 3,000,000
Puerto Rico Commonwealth Infrastructure Financing Authority 2.49 9/1/05 1,495,000 1,495,000
------------
4,495,000
------------
UTAH - 1.7%
Utah State Building Ownership Authority Lease Revenue, LOC Landesbank
Hessen-Thrgn 2.45 9/7/05 2,440,000 2,440,000
------------
WEST VIRGINIA - 3.0%
Marshall County West Virginia Pollution Control Revenue - Ohio Power
Company - Series E 2.33 9/1/05 4,500,000 4,500,000
------------
OTHER TERRITORIES - 4.7%
Eagle Tax-Exempt Trust, COP 2.53 9/1/05 4,490,000 4,490,000
Puttable Floating Option Tax-Exempt Receipts 2.70 9/1/05 2,380,000 2,380,000
------------
6,870,000
------------
TOTAL VARIABLE MUNICIPAL BONDS (AMORTIZED COST $120,075,000) 120,075,000
------------
TOTAL INVESTMENTS (AMORTIZED COST $147,250,532) (A) - 99.8% 147,250,532
Other Assets less Liabilities - 0.2% 322,904
------------
TOTAL NET ASSETS - 100% 147,573,436
============
- ----------
* Variable rate investment. Securities payable on demand at par including
accrued interest (usually within seven days notice) and unconditionally
secured as to principal and interest by letters of credit or other credit
support agreements from major banks. The interest rates are adjustable and
are based on bank prime rates or other interest rate adjustment indices.
The rate shown represents the rate in effect at August 31, 2005. The
maturity date shown reflects next rate change date.
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
COP - Certificates of Participation
HFA - Housing Finance Authority
IDR - Industrial Development Revenue
LOC - Letter of Credit
TAN - Tax Anticipation Note
VALIANT TAX-EXEMPT MONEY MARKET PORTFOLIO
Commercial Paper 9.3%
Variable Municipal Bonds 81.4
Municipal Bonds and Notes 9.1
------
99.8
Other Assets less Liabilities 0.2
------
100.0%
======
See notes to financial statements.
16
THE VALIANT FUND
TAX-EXEMPT MONEY MARKET PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 2005
ASSETS:
Investments, at value (amortized cost $147,250,532) $ 147,250,532
Cash 8,365
Receivables:
Interest 653,559
Other assets 314
-------------
TOTAL ASSETS 147,912,770
-------------
LIABILITIES:
Payables:
Dividends $ 310,084
Accrued expenses and other liabilities:
Investment manager 28,149
Distribution and shareholder servicing 1,101
-------------
TOTAL LIABILITIES 339,334
-------------
NET ASSETS $ 147,573,436
=============
COMPOSITION OF NET ASSETS:
Capital $ 147,626,882
Accumulated net realized loss from investment transactions (53,446)
-------------
NET ASSETS $ 147,573,436
=============
Class A Shares
Net Assets $ 143,821,319
Shares outstanding (unlimited number of shares authorized with no par value) 143,958,514
Net Asset Value, Offering Price and Redemption Price per share $ 1.00
=============
Class B Shares
Net Assets $ 3,752,117
Shares outstanding (unlimited number of shares authorized with no par value) 3,756,738
Net Asset Value, Offering Price and Redemption Price per share $ 1.00
=============
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 2005
INVESTMENT INCOME:
Interest $ 3,726,336
-------------
Total Investment Income $ 3,726,336
EXPENSES:
Investment manager $ 373,597
Distribution and shareholder servicing:
Class A Shares 622,203
Class B Shares 31,592
Trustees fees 7,857
-------------
Total expenses before contractual fee reimbursements $ 1,035,249
Contractual fee waivers and expense reimbursements (639,086)
-------------
NET EXPENSES 396,163
-------------
NET INVESTMENT INCOME 3,330,173
-------------
NET REALIZED GAIN FROM INVESTMENT TRANSACTIONS 5,431
-------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 3,335,604
=============
See notes to financial statements.
17
THE VALIANT FUND
TAX-EXEMPT MONEY MARKET PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE FOR THE
YEAR ENDED YEAR ENDED
AUGUST 31, 2005 AUGUST 31, 2004
--------------- ---------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 3,330,173 $ 1,333,815
Net realized gain from investment transactions 5,431 --
--------------- ---------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 3,335,604 1,333,815
--------------- ---------------
DIVIDENDS:
Net investment income:
Class A Shares (3,204,440) (1,297,979)
Class B Shares (125,733) (35,836)
--------------- ---------------
TOTAL DIVIDENDS TO SHAREHOLDERS (3,330,173) (1,333,815)
--------------- ---------------
INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL TRANSACTIONS (NOTE 4) 9,979,884 (4,930,918)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS 9,985,315 (4,930,918)
NET ASSETS:
Beginning of year 137,588,121 142,519,039
--------------- ---------------
End of year (including accumulated undistributed net
investment income of $0 and $0, respectively) $ 147,573,436 $ 137,588,121
=============== ===============
See notes to financial statements.
18
THE VALIANT FUND
TAX-EXEMPT MONEY MARKET PORTFOLIO
FINANCIAL HIGHLIGHTS, CLASS A SHARES
For the years ended August 31,
----------------------------------------------------------------------
2005 2004 2003 2002 2001
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, BEGINNING OF YEAR $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
---------- ---------- ---------- ---------- ----------
INVESTMENT ACTIVITIES
Net investment income 0.018 0.008 0.014 0.015 $ 0.030
---------- ---------- ---------- ---------- ----------
DIVIDENDS
Net investment income (0.018) (0.008) (0.014) (0.015) $ (0.030)
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF YEAR $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
========== ========== ========== ========== ==========
TOTAL RETURN (A) 1.79% 0.83% 1.03% 1.49% 3.42%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 143,821 $ 123,388 $ 142,519 $ 174,104 $ 141,464
Ratio of expenses to average net assets, before contractual
fee waivers and / or expense reimbursements 0.55% 0.55% 0.55% 0.55% 0.55%
Ratio of expenses to average net assets 0.20% 0.20% 0.20% 0.20% 0.20%
Ratio of net investment income to average net assets 1.80% 0.83% 1.02% 1.47% 3.39%
FINANCIAL HIGHLIGHTS, CLASS B SHARES
For the
period
For the February 25,
year ended 2004(b) to
August 31, August 31,
2005 2004
-------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000
---------- ----------
INVESTMENT ACTIVITIES
Net investment income 0.015 0.003
DIVIDENDS
Net investment income (0.015) (0.003)
---------- ----------
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000
========== ==========
TOTAL RETURN (A) 1.54% 0.31%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 3,752 $ 14,200
Ratio of expenses to average net assets, before contractual
fee waivers and / or expense reimbursements 0.55% 0.55%(c)
Ratio of expenses to average net assets 0.45% 0.45%(c)
Ratio of net investment income to average net assets 1.39% 0.60%(c)
(a) Total return is calculated assuming a purchase of shares on the first day
and a sale on the last day of each period reported and includes
reinvestment of dividends. Total returns for periods less than one full
year are not annualized.
(b) Commencement of share class.
(c) Annualized.
See notes to financial statements.
19
THE VALIANT FUND
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2005
1. ORGANIZATION:
The U.S. Treasury Money Market Portfolio, General Money Market Portfolio,
Tax-Exempt Money Market Portfolio, and U.S. Treasury Income Portfolio are
separate portfolios of The Valiant Fund. The Valiant Fund (the "Trust") is a
Massachusetts business trust, organized on January 29, 1993 and is registered
under the Investment Company Act of 1940, as amended (the "Act"), as an open-end
management investment company. The Trust is authorized to offer five classes of
shares: Class A, Class B, Class C (has not commenced operations), Class D and
Class E. The five classes are identical, except as to the services offered to,
and the expenses borne, by each class. This report covers U.S. Treasury Money
Market Portfolio, General Money Market Portfolio, and Tax-Exempt Money Market
Portfolio (referred to individually as a "Portfolio" and collectively as the
"Portfolios") for the year ended August 31, 2005. A separate report is issued
for the U.S. Treasury Income Portfolio for the year ended August 31, 2005.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by
the Portfolios in the preparation of their financial statements. The policies
are in conformity with generally accepted accounting principles in the United
States of America. The preparation of financial statements requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of income and expenses for the
period. Actual results could differ from those estimates.
SECURITY VALUATION:
As permitted under Rule 2a-7 of the 1940 Act, and certain conditions
therein, securities of the Portfolios are valued initially at cost and
thereafter assume a constant amortization to maturity of any discount or
premium.
SECURITIES TRANSACTIONS AND RELATED INCOME:
Securities transactions are recorded on trade date. Security gains and
losses are calculated on the identified cost basis. Interest income is
recognized on the accrual basis and includes, where applicable, the amortization
or accretion of a premium or a discount.
REPURCHASE AGREEMENTS:
Each Portfolio may enter into repurchase agreements with an entity whose
creditworthiness has been reviewed and found satisfactory by the Portfolios'
Sub-Advisor, Reich & Tang Asset Management L.P. The repurchase price generally
equals the price paid by a Portfolio plus interest negotiated on the basis of
current short-term rates, which may be more or less than the rate on the
underlying portfolio securities. The seller, under a repurchase agreement, is
required to maintain the appropriate collateral levels held pursuant to the
agreement, with a market value equal to or greater than the repurchase price
(including accrued interest). Collateral subject to repurchase agreements is
held by the Portfolios' custodian, either physically or in book entry form. If
the seller defaults and the fair value of the collateral declines, realization
of the collateral by the Portfolios may be delayed or limited.
EXPENSE ALLOCATION:
Expenses directly attributable to a Portfolio are charged to that
Portfolio. Trust expenses are allocated proportionately among each Portfolio
within the Trust in relation to the net assets of each Portfolio. Expenses
specific to a class are charged to that class.
20
THE VALIANT FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AUGUST 31, 2005
DIVIDENDS TO SHAREHOLDERS:
The Portfolios' declare all net investment income daily as dividends to
their shareholders and distribute such dividends monthly. Additional dividends
are also paid to the Portfolios' shareholders to the extent necessary to avoid
the federal excise tax on certain undistributed income and net realized gains of
registered investment companies. Dividends are recorded on the ex-dividend date.
The amount of dividends from net investment income and net realized gains
are determined in accordance with U.S. income tax regulations, which may differ
from the U.S. generally accepted accounting principles. These "book/tax"
differences are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts are reclassified
among the components of net assets (See Note 7). Temporary differences do not
require reclassification.
FEDERAL TAXES:
Each Portfolio is a separate taxable entity for federal tax purposes. Each
Portfolio has qualified and intends to qualify each year as a "regulated
investment company" under Subchapter M of the Internal Revenue Code, as amended,
and distribute substantially all of its taxable net investment income and net
realized gains, if any, to their shareholders. Accordingly, no provision for
federal income excise tax is required.
3. RELATED PARTY TRANSACTIONS:
INVESTMENT ADVISER:
Integrity Management & Research, Inc. (the "Manager"), a wholly-owned
subsidiary of Integrity Investments, Inc., serves as the Investment Adviser to
the Trust. The Trust pays the Manager a fee, computed daily and paid monthly, at
the annual rate of 0.20% of the average daily net assets of each Portfolio. For
the year ended August 31, 2005, the Manager earned fees of $535,455, $876,689,
and $373,597 from the U.S. Treasury Money Market Portfolio, the General Money
Market Portfolio, and the Tax-Exempt Money Market Portfolio, respectively. At
August 31, 2005, there was a payable due to the Manager in the amount $41,171,
$62,583, and $28,149 to the U.S. Treasury Money Market Portfolio, the General
Money Market Portfolio, and the Tax-Exempt Money Market Portfolio, respectively.
Under terms of the Management Agreement, all expenses incurred by the
Portfolios are paid directly by the Manager, except for distribution and
shareholder servicing fees, Trustee fees and other miscellaneous non-recurring
fees.
Certain trustees of the Trust are also officers of the Manager.
CUSTODIAN:
The Bank of New York, ("Custodian") is the Custodian for each Portfolio
under custodian agreements with respect to each Portfolio.
The Bank of New York also provides fund accounting and administrative
services pursuant to a Fund Accounting Agreement dated September 1, 2001 (the
"Fund Accounting Agreement") between the Trust and The Bank of New York. The
Fund Accounting Agreement has provisions for termination, limitation of
liability and indemnification. The Bank of New York maintains all Trust books
and records required under Rule 31a-1 under the Investment Company Act of 1940,
as amended, performs daily accounting services and provides additional fund
reporting and record keeping services.
21
THE VALIANT FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AUGUST 31, 2005
DISTRIBUTION AND SHAREHOLDER SERVICING PLAN:
Integrity Investments, Inc. (the "Distributor"), an affiliate of the
Manager, acts as exclusive distributor of the Trust's shares. The Trust has
adopted distribution and shareholder servicing plans for each class of shares
offered (together, the "Plans") pursuant to Rule 12b-1 of the 1940 Act. For its
services, the Distributor is authorized to receive a fee, computed daily and
paid monthly, based on the average daily net assets of each class, at the
following annual percentage rates:
CLASS FEE RATE
----- --------
Class A Shares 0.35%
Class B Shares 0.35
Class C Shares 0.65
Class D Shares 0.50
Class E Shares 0.80
EXPENSE LIMITATIONS:
The Portfolios' Manager and Distributor have contractually agreed to
reimburse expenses and waive certain distribution fees necessary to limit total
expenses to the following rates until December 31, 2005:
CLASS EXPENSE LIMITATION
----- ------------------
Class A Shares 0.20%
Class B Shares 0.45
Class C Shares 0.85
Class D Shares 0.70
Class E Shares 1.00
FEE REIMBURSEMENTS:
Expenses reimbursed and fees waived by the Manager and Distributor are set
forth on each Portfolio's Statement of Operations.
For the year ending August 31, 2005, the Manager and Distributor waived
$95,982 of fees and expenses for the U.S. Treasury Money Market Portfolio. These
expenses related to $2,573 of fees attributable to Class A, $80,339 attributable
to Class B, and all Trustees fees of $13,070 incurred by the Portfolio during
the year.
For the year ended August 31, 2005, the Manager and Distributor waived
$1,218,282 of fees and expenses for the General Money Market Portfolio. These
expenses related to $1,197,317 of fees attributable to Class A, $1,892
attributable to Class B, and all Trustees fees of $19,073 incurred by the
Portfolio during the year.
For the year ending August 31, 2005, the Manager and Distributor waived
$639,086 of fees and expenses for the Tax-Exempt Money Market Portfolio. These
expenses related to $622,203 of fees attributable to Class A, $9,026
attributable to Class B, and all Trustees fees of $7,857 incurred by the
Portfolio during the year.
22
THE VALIANT FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AUGUST 31, 2005
4. CAPITAL SHARE TRANSACTIONS:
Each class is authorized to issue an unlimited number of shares with no
par value. Transactions in capital and shares of beneficial interest by class
for the Portfolios for the year ended August 31, 2005 and year ended August
31,2004 are listed below (amounts represent shares and dollars):
U.S. TREASURY MONEY MARKET GENERAL MONEY MARKET TAX-EXEMPT MONEY MARKET
PORTFOLIO PORTFOLIO PORTFOLIO
--------------------------------- --------------------------------- ------------------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
AUGUST 31, 2005 AUGUST 31, 2004 AUGUST 31, 2005 AUGUST 31, 2004 AUGUST 31, 2005 AUGUST 31, 2004(A)
--------------------------------- --------------------------------- ------------------------------------
CLASS A SHARES:
Issued 4,383,903 5,702,303 2,252,369,563 1,952,747,763 927,991,009 667,041,719
Reinvested 159 63 1,158 478 21 8
Redeemed (3,535,140) (12,525,863) (2,235,375,246) (2,060,220,432) (907,554,407) (686,186,122)
--------------------------------- --------------------------------- ---------------------------------
Net increase (decrease)
in Class A Shares 848,922 (6,823,497) 16,995,475 (107,472,191) 20,436,623 (19,144,395)
--------------------------------- --------------------------------- ---------------------------------
CLASS B SHARES:
Issued 365,525,182 373,802,150 13,342,623 36,476,675 19,064,385 26,356,643
Reinvested 110,502 37,383 39 -- 16,140 --
Redeemed (370,001,659) (410,825,366) (18,304,206) (42,034,706) (29,537,264) (12,143,166)
--------------------------------- --------------------------------- ---------------------------------
Net increase (decrease)
in Class B Shares (4,365,975) (36,985,833) (4,961,544) (5,558,031) (10,456,739) 14,213,477
--------------------------------- --------------------------------- ---------------------------------
CLASS D SHARES:
Issued 270,321,902 658,004,478 33,647,663 44,941,959 -- --
Reinvested -- -- 15,694 13,940 -- --
Redeemed (335,025,300) (746,546,357) (39,060,183) (60,779,354) -- --
--------------------------------- --------------------------------- ---------------------------------
Net decrease in
Class D Shares (64,703,398) (88,541,879) (5,396,826) (15,823,455) -- --
--------------------------------- --------------------------------- ---------------------------------
CLASS E SHARES:
Issued 81,769,269 111,848,476 87,465,595 56,739,821 -- --
Reinvested 16 1 319 2 -- --
Redeemed (81,051,656) (125,386,366) (98,864,353) (67,692,673) -- --
--------------------------------- --------------------------------- ---------------------------------
Net increase (decrease)
in Class E Shares 717,629 (13,537,889) (11,398,439) (10,952,850) -- --
--------------------------------- --------------------------------- ---------------------------------
NET INCREASE
(DECREASE) IN SHARE
TRANSACTIONS (67,502,822) (145,889,098) (4,761,334) (139,806,527) 9,979,884 (4,930,918)
================================= ================================= =================================
(a) Class B shares commenced operations on February 25, 2004.
23
THE VALIANT FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AUGUST 31, 2005
5. SECURITIES LENDING:
Under an agreement with the Custodian, the Portfolios can lend their
securities to approved brokers, dealers and other financial institutions. The
Portfolios also continue to receive interest on the securities loaned. Loans are
collateralized by cash, in an amount at least equal to the market value of the
securities loaned plus accrued interest. The cash collateral is received and is
invested in a money market account with the Custodian. A portion of the income
generated by the investment of the collateral, net of any rebates paid by the
Custodian to borrowers, is remitted to the Custodian as lending agent, and the
remainder is paid to the Portfolios. Generally, in the event of counterparty
default, the Portfolios have the right to use the collateral to offset losses
incurred. As of August 31, 2005, there were no outstanding securities on loan
for any of the Portfolios.
6. CONCENTRATION OF CREDIT RISK:
As of August 31, 2005, approximately 58.4% of the Tax-Exempt Money Market
Portfolio was invested in obligations of political subdivisions of the State of
Florida and, accordingly, is subject to the credit risk associated with the
non-performance of such issuers. Approximately 97.7% of these investments are
further secured, as to principal and interest, by credit enhancements such as
letters of credit, municipal bond insurance, and guarantees issued by financial
institutions.
7. FEDERAL TAX INFORMATION:
All of the dividends paid for the year ended August 31, 2005 and the year
ended August 31, 2004 by the General Money Market Portfolio and the U.S.
Treasury Money Market Portfolio are ordinary income for federal income tax
purposes.
During the year ended August 31, 2005 and the year ended August 31, 2004,
all of the distributions paid by the Tax-Exempt Money Market Portfolio have been
designated tax-exempt income distributions.
Undistributed net investment income differs for financial statement and
tax purposes primarily due to the timing of dividend payments.
At August 31, 2005 the following reclassification was made to the capital
account of the noted fund to reflect permanent book/tax differences and income
and gains available for distributions under income tax regulations, which are
primarily due to the differences between book and tax treatment of the
expiration of unused capital loss carryforwards. Net investment income, net
realized gains, and net assets were not affected by these changes.
UNDISTRIBUTED
CAPITAL GAINS/
ACCUMULATED PAID IN
LOSSES CAPITAL
--------------- ---------------
General Money Market Fund $29,268 ($29,268)
24
THE VALIANT FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AUGUST 31, 2005
For federal income tax purposes, the following Portfolios have capital loss
carryforwards as of August 31, 2005, which are available to offset future
realized gains, if any:
NAME AMOUNT EXPIRES
- -------------------------- --------------------------
U.S. Treasury Money Market $ 229,798 2008
21,859 2009
----------
$ 251,657
==========
General Money Market $ 51,799 2008
1,354 2013
----------
$ 53,153
==========
Tax-Exempt Money Market $ 8,571 2006
2,545 2008
42,330 2009
----------
$ 53,446
==========
Capital losses incurred after October 31 ("post-October" losses) within
the taxable year are deemed to arise on the first business day of the fund's
next taxable year. The Portfolio indicated incurred and will elect to defer net
capital losses noted during 2005. The General Money Market Portfolio will defer
post-October losses in the amount of $22.
8. BENEFICIAL OWNERSHIP
The beneficial ownership, either directly or indirectly, of more than 25%
of the voting securities of a Portfolio creates a presumption of control of the
Portfolio under Section 2(a)(9) of the Investment Company Act of 1940. As of
August 31, 2005, Relico held 86.19% of Class A shares, Hare & Co. held 92.12% of
Class B shares, 43.95% of Class D shares, and 79.66% of Class E shares, and
First Union National Bank held 50.96% of Class D shares of the U.S. Treasury
Money Market Portfolio in an omnibus account for the sole benefit of their
customers. First Union National Bank held 81.00% of the Class A shares and
Relico held 100% of the Class B and Class E shares, and 99.61% of the Class D
shares of the General Money Market Portfolio in an omnibus account for the sole
benefit of their customers. First Union National Bank held 93.01% of Class A
shares, Reich & Tang Services, Inc. (a related party to the Sub-Advisor) held
54.11% and Relico held 45.89% of Class B shares of the Tax-Exempt Money Market
Portfolio in an omnibus account for the sole benefit of their customers.
9. CHANGE IN ACCOUNTANTS (UNAUDITED)
On May 26, 2005, PricewaterhouseCoopers LLP resigned as the Portfolios'
independent registered public accounting firm. On May 26, 2005, Cohen McCurdy,
Ltd. ("Cohen") was selected to replace PricewaterhouseCoopers LLP as the
Portfolios' independent auditors for the 2005 fiscal year. The Funds' selection
of Cohen was recommended by the Audit Committee and was approved by the Board of
Trustees.
25
THE VALIANT FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AUGUST 31, 2005
PricewaterhouseCoopers' reports on the Portfolios' financial statements as
of August 31, 2004 and 2003 did not contain an adverse opinion or a disclaimer
of opinion and was not qualified or modified as to uncertainty, audit scope or
accounting principles. At the financial statement date and through the date of
the engagement of Cohen, there were no disagreements between the Portfolios and
PricewaterhouseCoopers LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedures which such
disagreements, if not resolved to the satisfaction of PricewaterhouseCoopers LLP
would have caused it to make reference to the subject matter of the disagreement
in connection with its reports on the financial statements for such period.
Neither the Portfolios nor anyone on their behalf consulted with Cohen on
items which (i) concerned the application of accounting principles to a
specified transaction, either completed or proposed or the type of audit opinion
that might be rendered on the Portfolios' financial statements as a result of
such consultations or (ii) concerned the subject of a disagreement (as defined
in paragraph (a)(1)(iv) of Item 304 of Regulation S-K) or a reportable event (as
describe in paragraph (a)(1)(v) of said Item 304).
26
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of
Trustees of The Valiant Fund
We have audited the accompanying statements of assets and liabilities, including
the schedules of portfolio investments, of The Valiant Fund, comprising the U.S.
Treasury Money Market Portfolio, General Money Market Portfolio, and Tax-Exempt
Money Market Portfolio (the "Funds") as of August 31, 2005, and the related
statements of operations, the statements of changes in net assets, and the
financial highlights for the year then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit. The statement of changes in net assets
and financial highlights for the periods indicated prior to August 31, 2005 were
audited by other auditors, who expressed unqualified opinions on those
statements and highlights.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
investments and cash held as of August 31, 2005 by correspondence with the
Funds' custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the Funds constituting The Valiant Fund as of August 31, 2005, the results of
their operations, the changes in their net assets, and their financial
highlights for the year then ended in conformity with accounting principles
generally accepted in the United States of America.
Cohen McCurdy, Ltd.
Westlake, Ohio
October 28, 2005
27
MANAGEMENT OF THE TRUST
The trustees and officers of the Trust and their principal occupations during
the past five years are as follows:
RICHARD F. CURCIO PRESIDENT, TRUSTEE, CHAIRMAN OF THE BOARD
Founded Integrity Investments, Inc. (a broker/dealer) and Integrity Management &
Research, Inc.(an investment adviser) in 1992, and is currently President and
Director of each. Senior Vice President/Regional Manager for Fidelity
Institutional Services Company from 1987 to 1992. Associated with Fidelity
Distributors from 1979 to 1992.
JOHN S. CULBERTSON TRUSTEE
Retired. Trust Consultant with Fidelity Investments Institutional Services Co.
from 1990 to 1993.
RUFUS C. CUSHMAN JR. TRUSTEE
Retired. Money Manager with Fidelity Management & Research Corp. From 1968
through 1994.
H. WILLIS DAY TRUSTEE
Retired. Former Senior Vice President of Southeast Bank, FLA, N.A.
ROGER F. DUMAS TRUSTEE
Private investor since 1987.
KENNETH J. PHELPS TRUSTEE
President, Principal and Director of Reliance Trust Company, Atlanta, GA since
1992. Chairman, Chief Executive Officer and Director, C&S/Sovran Trust Company,
Inc. from 1987 to 1992.
DENIS R. CURCIO VICE PRESIDENT, SECRETARY AND TREASURER
Mr. Curcio joined Integrity Investments, Inc. the distributor of The Valiant
Fund in June of 1998 after graduating from Jacksonville University with a BS in
Finance. Aged 29, Denis is responsible for oversight and administration of The
Valiant Fund.
28
BRENDEN R. CURCIO VICE PRESIDENT
Mr. Curcio joined Integrity Investments, Inc., the distributor of The Valiant
Fund in June of 1994 after graduating from Stetson University with a BBA in
Finance. Aged 33, Brenden is responsible for institutional sales of The Valiant
Fund in the Northeast and Midwest.
Proxy Voting Policies and Procedures
A description of the Portfolios' proxy voting policies and procedures and
information regarding how the Portfolios' voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30, is available,
without charge and upon request, by calling Integrity Investments, Inc. at
1-800-828-2176 or by accessing the Portfolios' Form N-PX on the Securities and
Exchange Commission's website at www.sec.gov.
Quarterly Portfolios
The Trust files its complete schedule of portfolio holdings with the Commission
for the first and third quarters of each fiscal year on Form N-Q. The Trust's
Forms N-Q are available on the Commission's website at www.sec.gov. The Trust's
Forms N-Q may also be reviewed and copied at the Commission's Public Reference
Room in Washington, DC; information on the operation of the Public Reference
Room may be obtained by calling (800)-SEC-0330.
29
APPROVAL OF ADVISORY AGREEMENTS
The Investment Advisory Agreements will continue in effect for more than two
years, provided that the continuance is approved annually (i) by the holders of
a majority of a Portfolio's outstanding voting securities or by the Board and
(ii) by a majority of the Trustees who are not parties to the Investment
Advisory Agreement or interested persons of any such party. The Investment
Advisory Agreements may be terminated on 60 days' written notice any such party
and will terminate automatically if assigned.
On June 22, 2005, the Board approved the continuation of the Management
Agreement with Integrity Research and Sub-Advisory Agreement between Integrity
Research and Reich & Tang, as described more fully below (collectively, the
"Advisory Agreements"). In determining whether to approve the continuation of
the Advisory Agreements, the Board requested and received from Integrity
Research information that the Board believed to be appropriate, reasonable and
necessary to reach a determination regarding the continuation of the Advisory
Agreements, including the information described below.
Although investment performance was a factor in determining whether the Advisory
Agreements should be continued, the Board also considered other factors in
evaluating the fairness and reasonableness of the compensation to be paid to
Integrity Research and Reich & Tang. The Board carefully evaluated the
information requested and was advised by legal counsel to the Portfolios and the
Non-Interested Trustees with respect to the Board's deliberations regarding the
Advisory Agreements. In considering the Advisory Agreements, the Board
considered information regarding: (i) each Portfolio's investment performance
during the previous year and for all relevant prior periods, including how
effectively each Portfolio tracked its respective index; (ii) each Portfolio's
total expenses; (iii) the nature, quality and extent of the services provided to
the Portfolios under the Advisory Agreements; (iv) the requirements of the
Portfolios for the services provided by Integrity Research and Reich & Tang; (v)
the fees payable for the services and other benefits derived by Integrity
Research and Reich & Tang from their relationship with the Portfolios; (vi) the
portfolio management process, personnel, systems, operations, quality,
reputation and financial condition of Integrity Research and Reich & Tang
(including Integrity Investment's profitability with respect to its relationship
with the Portfolios); (vii) current economic and industry trends; and (viii) the
historical relationship between each of the Portfolios and Integrity Research
and Reich & Tang.
In evaluating each Portfolio's investment performance and advisory fees, the
Board reviewed information compiled by an independent third party that compared
each Portfolio's expense ratio, investment advisory fee and performance with
comparable mutual funds. Current management fees under the Advisory Agreements
were reviewed in the context of: (i) the nature and high quality of the
investment advisory services provided by Integrity Research and Reich & Tang,
including the high quality of the services provided; (ii) Integrity Investment's
profitability with respect to each Portfolio, (iii) each Portfolio's historic
performance, including the extent to which each Portfolio successfully achieved
its stated investment objective (i.e., how closely each Portfolio tracked its
respective index); (iv) Integrity Investment's and Reich & Tang's commitment to
the management of the Portfolios; and (v) investment advisory fees paid by each
Portfolio, discussed in further detail below.
30
In approving the continuation of the Advisory Agreements, the Board noted the
following factors, among others, as the basis for its determination: The terms
of the Advisory Agreements, including the services to be provided to the
Portfolios and the advisory fees payable by the Portfolios, were generally
comparable to the terms of advisory arrangements within the industry and within
peer groups of mutual funds. The Board also noted that the Advisory Agreements
did not increase investment advisory fees payable by any Portfolio or overall
operating expenses of any Portfolio over historical fee and expense levels.
Integrity Research and Reich & Tang have historically provided high-quality
services in their management of the Portfolios and are committed to the
successful operation of the Portfolios. Based upon the information provided to
the Board, the Board expected that Integrity Research and Reich & Tang would
continue to provide high-quality services to the Portfolios. The Board also
noted that the Portfolios have continued to closely track the performance of
their respective benchmarks.
Based upon their review of the information requested and provided, and following
extensive discussions with Integrity Research as well as private deliberations
by the Non-Interested Trustees concerning the information, the Board determined
that continuing the Advisory Agreements was consistent with the best interests
of the Portfolios and their shareholders. Consequently, the Board unanimously
approved the Advisory Agreements for an additional annual period.
31
THE VALIANT FUND
U.S. TREASURY INCOME PORTFOLIO
ANNUAL REPORT
AUGUST 31, 2005
THE VALIANT FUND
U.S. TREASURY INCOME PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 2005*
ASSETS:
Cash $ 985
------------
TOTAL ASSETS 985
------------
LIABILITIES:
Accrued expenses and other liabilities:
Investment manager $ 364
------------
TOTAL LIABILITIES 364
------------
NET ASSETS $ 621
============
COMPOSITION OF NET ASSETS:
Capital $ 622
Undistributed net investment income 84
Accumulated net realized loss from
investment transactions (85)
------------
NET ASSETS $ 621
============
Class A Shares
Net Assets $ 621
Shares outstanding 622
Net Asset Value, Offering Price and
Redemption Price per share $ 1.00
============
* The portfolio has been inactive since 2001.
See notes to financial statements.
1
THE VALIANT FUND
U.S. TREASURY INCOME PORTFOLIO
FINANCIAL HIGHLIGHTS, CLASS A SHARES
For the years ended
--------------------------------------------------------------
2005 (a) 2004 (b) 2003 (c) 2002 (d) 2001 (e)
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.00
---------- ---------- ---------- ---------- ----------
INVESTMENT ACTIVITIES
Net investment income -- -- -- -- 0.01
Net realized gain from investment transactions -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total from investment activities -- -- -- -- 0.01
---------- ---------- ---------- ---------- ----------
DIVIDENDS
Net investment income -- -- -- -- (0.01)
---------- ---------- ---------- ---------- ----------
Total dividends -- -- -- -- (0.01)
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.00
========== ========== ========== ========== ==========
TOTAL RETURN -- -- -- -- 0.68%(f)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 1 $ 1 $ 1 $ 1 $ 1
Ratio of expenses to average net assets -- -- -- -- 0.20%(g)
Ratio of net investment income to average net assets -- -- -- -- 5.11%(g)
(a) The Portfolio did not operate during the year ended August 31, 2005.
(b) The Portfolio did not operate during the year ended August 31, 2004.
(c) The Portfolio did not operate during the year ended August 31, 2003.
(d) The Portfolio did not operate during the year ended August 31, 2002.
(e) The Portfolio operated from December 6, 2000 to January 24, 2001.
(f) Not Annualized.
(g) Annualized.
See notes to financial statements.
2
THE VALIANT FUND
U.S. TREASURY INCOME PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2005
1. ORGANIZATION:
The Valiant Fund (the "Trust") is a Massachusetts business trust,
organized on January 29, 1993 and is registered under the Investment Company Act
of 1940, as amended (the "Act"), as an open-end management investment company. A
separate annual report is issued for the U.S. Treasury Money Market Portfolio,
General Money Market Portfolio and Tax-Exempt Money Market Portfolio, separate
portfolios of the Trust. This report covers the U.S. Treasury Income Portfolio
(hereinafter referred to as "Portfolio") for the year ended August 31, 2005,
during which period the Portfolio did not conduct operations. As the Portfolio
did not have any operations during the years ended August 31, 2005 or August 31,
2004, a Statement of Operations and Statement of Changes in Net Assets has not
been presented.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by
the Portfolio in the preparation of its financial statements. The policies are
in conformity with generally accepted accounting principles in the United States
of America. The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
income and expenses for the period. Actual results could differ from those
estimates.
SECURITY VALUATION:
Investments of the Portfolio are valued at amortized cost, which
approximates value. Under the amortized cost method, discount or premium, if
any, is accreted or amortized, respectively, on a straight-line basis to the
maturity of the security. During the year ended August 31, 2005, the Portfolio
did not engage in any investment activities.
SECURITIES TRANSACTIONS AND RELATED INCOME:
Securities transactions are recorded on trade date. Security gains and
losses are calculated on the identified cost basis. Interest income is
recognized on the accrual basis and includes, where applicable, the amortization
or accretion of a premium or a discount. During the year ended August 31, 2005,
the Portfolio did not engage in any investment activities nor did it receive any
related income.
EXPENSE ALLOCATION:
Expenses directly attributable to a portfolio are specifically identified
and charged. Trust expenses are allocated proportionately among each of the
Portfolios within the Trust in relation to the net assets of each portfolio or
another reasonable basis. There were no expenses incurred by the Portfolio
during the year.
CAPITAL SHARE TRANSACTIONS:
The Portfolio is authorized to issue an unlimited number of shares with no
par value. No capital transactions occurred during the year.
3
THE VALIANT FUND
U.S. TREASURY INCOME PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AUGUST 31, 2005
BENEFICIAL OWNERSHIP
The beneficial ownership, either directly or indirectly, of more than 25%
of the voting securities of a Portfolio creates a presumption of control of the
Portfolio under Section 2(a)(9) of the Investment Company Act of 1940. As of
August 31, 2005, Integrity Investments held 100% of the shares of the Portfolio.
Certain officers and shareholders of Integrity Investments are also officers of
the Trust.
CHANGE IN ACCOUNTANTS (UNAUDITED)
On May 26, 2005, Cohen McCurdy, Ltd. ("Cohen") was selected to replace
PricewaterhouseCoopers LLP as the Portfolio's independent auditors for the 2005
fiscal year. The Portfolio's selection of Cohen was recommended by the Audit
Committee and was approved by the Board of Trustees.
PricewaterhouseCoopers' report dated October 27, 2004 on the Portfolio's
financial statements as of August 31, 2004 did not contain an adverse opinion or
a disclaimer of opinion and was not qualified or modified as to uncertainty,
audit scope or accounting principles. At the financial statement date and
through the date of the engagement of Cohen, there were no disagreements between
the Portfolio and PricewaterhouseCoopers LLP on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedures which such disagreements, if not resolved to the satisfaction of
PricewaterhouseCoopers LLP would have caused it to make reference to the subject
matter of the disagreement in connection with its reports on the financial
statements for such period.
Neither the Portfolio nor anyone on their behalf consulted with Cohen on
items which (i) concerned the application of accounting principles to a
specified transaction, either completed or proposed or the type of audit opinion
that might be rendered on the Portfolios' financial statements as a result of
such consultations or (ii) concerned the subject of a disagreement (as defined
in paragraph (a)(1)(iv) of Item 304 of Regulation S-K) or a reportable event (as
describe in paragraph (a)(1)(v) of said Item 304).
4
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of The Valiant Fund and
the Shareholders of the U.S. Treasury Income Portfolio
We have audited the statement of assets and liabilities of the U.S. Treasury
Income Portfolio (one of the funds constituting the Valiant Fund, hereafter
referred to as the "Fund") as of August 31, 2005, and the financial highlights
for the year then ended. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audit. The financial highlights for the periods indicated prior to August 31,
2005 were audited by other auditors, who expressed unqualified opinions on those
statements and highlights.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statement and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
cash held as of August 31, 2005 by correspondence with the Fund's custodian. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
The Fund has been inactive since January 24, 2001.
In our opinion, the financial statement and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Fund as of August 31, 2005, and its financial highlights for the year then ended
in conformity with accounting principles generally accepted in the United States
of America.
Cohen McCurdy, Ltd.
Westlake, Ohio
October 28, 2005
5
MANAGEMENT OF THE TRUST
The trustees and officers of the Trust and their principal occupations during
the past five years are as follows:
RICHARD F. CURCIO PRESIDENT, TRUSTEE, CHAIRMAN OF THE BOARD
Founded Integrity Investments, Inc. (a broker/dealer) and Integrity Management &
Research, Inc.(an investment adviser) in 1992, and is currently President and
Director of each. Senior Vice President/Regional Manager for Fidelity
Institutional Services Company from 1987 to 1992. Associated with Fidelity
Distributors from 1979 to 1992.
JOHN S. CULBERTSON TRUSTEE
Retired. Trust Consultant with Fidelity Investments Institutional Services Co.
from 1990 to 1993.
RUFUS C. CUSHMAN JR. TRUSTEE
Retired. Money Manager with Fidelity Management & Research Corp. From 1968
through 1994.
H. WILLIS DAY TRUSTEE
Retired. Former Senior Vice President of Southeast Bank, FLA, N.A.
ROGER F. DUMAS TRUSTEE
Private investor since 1987.
KENNETH J. PHELPS TRUSTEE
President, Principal and Director of Reliance Trust Company, Atlanta, GA since
1992. Chairman, Chief Executive Officer and Director, C&S/Sovran Trust Company,
Inc. from 1987 to 1992.
DENIS R. CURCIO VICE PRESIDENT, SECRETARY AND TREASURER
Mr. Curcio joined Integrity Investments, Inc. the distributor of The Valiant
Fund in June of 1998 after graduating from Jacksonville University with a BS in
Finance. Aged 29, Denis is responsible for oversight and administration of The
Valiant Fund.
6
BRENDEN R. CURCIO VICE PRESIDENT
Mr. Curcio joined Integrity Investments, Inc., the distributor of The Valiant
Fund in June of 1994 after graduating from Stetson University with a BBA in
Finance. Aged 34, Brenden is responsible for institutional sales of The Valiant
Fund in the Northeast and Midwest.
PROXY VOTING POLICIES AND PROCEDURES
You may obtain a description of the Trusts' proxy voting policies and
procedures, without charge, upon request, by calling Integrity Investments, Inc.
at 1-800-828-2176 or by going to the Securities and Exchange Commission's
website at www.sec.gov.
Information regarding how the Trust voted proxies relating to portfolio
securities, if applicable, during the most recent 12-month period ended June 30,
is also available, without charge and upon request, by calling Integrity
Investments, Inc. at 1-800-828-2176 or accessing the Trusts' Form N-PX on the
Securities and Exchange Commission's website at www.sec.gov.
QUARTERLY PORTFOLIOS
The Trust files its complete schedule of portfolio holdings with the Commission
for the first and third quarters of each fiscal year on Form N-Q. The Trust's
Forms N-Q are available on the Commission's website at www.sec.gov. The Trust's
Forms N-Q may also be reviewed and copied at the Commission's Public Reference
Room in Washington, DC; information on the operation of the Public Reference
Room may be obtained by calling (800)-SEC-0330.
7
ITEM 2. CODE OF ETHICS.
The registrant has adopted a code of ethics that applies to the Registrant's
President and Treasurer. No waivers or amendments have been granted or approved
during the period covered by this report
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
No financial expert was chosen because the disinterested trustees are all
retired financial or investment professionals and none believe they are
qualified as financial experts.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
a) AUDIT FEES: the aggregate fees billed in each of the last two fiscal years
for professional services rendered by the principal accountant for the audit are
as follows:
2005: $46,500
2004: $67,000
b) AUDIT-RELATED FEES: the aggregate fees billed in each of the last two fiscal
years for assurance and related services by the principal accountant that are
reasonably related to the performance of the audit of the registrant's financial
statements and are not reported under paragraph (a) of this item are as follows:
2005: $0
2004: $0
c) TAX FEES, the aggregate fees billed in each of the last two fiscal years for
professional services rendered by the principal accountant for tax compliance,
tax advice, and tax planning are as follows:
2005: $4,500
2004: $10,500
d) ALL OTHER FEES, the aggregate fees billed in each of the last two fiscal
years for products and services provided by the principal accountant, other than
the services reported in paragraphs (a) and (c) of this Item are as follows:
2005: $0
2004: $0
e) AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES. In accordance with Rule
2-01(c)(7)(A), the Audit committee pre-approves all of the Audit and Tax Fees of
the Registrant. All of the services described in paragraphs (b) and (c) above
were approved by the Audit Committee in accordance with paragraph (c) (7) (i)
(c) of Rule 2-01 of Regulation S-X.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The Valiant Fund has a separately designated Audit Committee, which consists of
the independent trustees. The audit committee members are John S. Culbertson, H.
Willis Day, Jr., Roger F. Dumas, and Rufus C. Cushman, Jr.
ITEM 6. SCHEDULE OF INVESTMENTS.
The Schedule of Investments is included as a part of the report to shareholders
filed under Item 1 of this Form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASE OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
None.
ITEM 11. CONTROLS AND PROCEDURES.
a) Based on their evaluation on November 2, 2005, the President (principal
executive officer) and the Treasurer (principal financial officer) of the
Valiant Fund (the "Fund") believe that there were no significant
deficiencies in the design or operation of the internal controls of the
Fund or Integrity Investments Inc. ("II"), the investment adviser, and The
Bank of New York ("BNY"), administrator of the Fund, including disclosure
controls and procedures (as defined in Rule 30a-2(c) under the Investment
Company Act of 1940) that adversely affected the ability of the Fund, or
II, or BNY, on behalf of the Fund, to record, process, summarize, and
report the subject matter contained in this Report, and the President and
Treasurer of the Fund have identified no material weaknesses in such
internal controls on behalf of the Fund. There was no fraud, whether or
not material, involving officers or employees of II, or BNY, or the Fund
who have a significant role in the Fund's internal controls, including
disclosure controls and procedures (as defined in Rule 30a-2(c) under the
Investment Company Act of 1940) that has come to the attention of the
Adviser or the officers of the Fund, including its President and
Treasurer.
b) There were no significant changes in the Fund and the II's internal
controls, including disclosure controls and procedures (as defined in Rule
30a-2(c) under the Investment Company Act of 1940) that apply to the Fund
or in other factors with respect to the Fund that could have significantly
affected the Fund's or the II's internal controls during the period
covered by this Form N-CSR, and no corrective actions with regard to
significant deficiencies or material weaknesses were taken by the Fund or
the RI during such period.
ITEM 12. EXHIBITS.
(a)(1) Code of Ethics.
(a)(2) Certification of principal executive officer and principal financial
officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(b) Certification of principal executive officer and principal financial officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) THE VALIANT FUND
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By (Signature and Title) /s/ Richard F. Curcio
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Richard F. Curcio, Chairman of the Board and President
Date November 10, 2005
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title) /s/ Richard F. Curcio
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Richard F. Curcio, Chairman of the Board and President
Date November 10, 2005
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By (Signature and Title) /s/ Denis R. Curcio
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Denis R. Curcio, Treasurer
Date November 10, 2005
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